Ontario’s Long Term Energy Plan: pay lots of money for small carbon reductions

Nobody should be surprised by anything in the Long Term Energy Plan the Ontario government released last week. The biggest question is what will replace coal-fired generation, which the government has promised to phase out. Coal has historically provided 20–25 percent of the province’s power. The LTEP leads off by saying conservation will do part of that, which it absolutely will not. (Try charging your cell phone with conservation, and you’ll see what I mean.) This is just lip service to please “environmentalists” who think electricity is the worst kind of energy. The government’s real plan is to replace coal with natural gas. And that would be a terrible move.

It would be terrible because even though gas is cheap today, companies that generate power with gas still cannot make a profit without massive support from rate payers. As I showed in my most recent post, nuclear power—gas’s biggest competitor in the baseload market—subsidizes gas and wind generators in Ontario. Not counting coal, nuclear and hydro are the cheapest sources of electricity in Ontario. Nuclear and hydro generate by far the most kilowatt-hours. To these kWhs, the province attaches what we could call the “political correctness premium”—officially called the Global Adjustment. Every Ontario rate-payer pays a Global Adjustment charge. This directly subsidizes the warm and fuzzy kinds of electricity that are just too expensive to survive otherwise.

These politically correct sources include wind, solar, and conservation. Yes, and conservation. The government actually counts conservation as a source of electricity supply, even though this flies in the face of every human’s physical experience. As I mentioned, try using conservation to run your household appliances; let me know how it works out. If you are an emergency room doctor, try resuscitating a patient with a conservation-powered crash cart. Or, next time there’s a blackout, switch to your emergency conservation backup supply. Parker Gallant, who writes for the Financial Post, has a great column on the idiocy of conservation.

Let me be fair: the current plan won’t lead to blackouts. Not even the government really believes conservation will contribute actual electricity. That’s why the real plan is to replace coal with gas. Gas will of course provide real electricity, but—as today’s Global Adjustment figures prove—at dangerously high prices. Anybody on a fixed income who lives in a high rise is going to feel this. Any electricity-intensive industrial operation will be forced to cut backroom one-off discount deals with the government, or move to another jurisdiction where power is cheaper.

Everybody should remember that the plan was devised in order to please rich environmentalists who prefer natural gas—the same fossil fuel that is producing the skyrocketing greenhouse gas emissions in Alberta’s oil sands—over nuclear energy, which releases no carbon into the atmosphere.

To me, that is the kicker. The entire coal phase-out is completely unnecessary. Let’s remember that coal combustion emissions are the original reason for the phase-out: first it was nitrogen, sulfur, and mercury; then it was carbon dioxide. Ontario could have low-emission power, at bargain basement prices, if it put the nuclear contribution up to sixty percent instead of the planned fifty. That was the situation in the mid-1990s—Ontario’s generation-related pollution emissions were 9 million metric tons below the eventual Kyoto target. There were five coal stations (today there are four). Power was cheap.

Coal could and should stay in the system as cheap large scale backup. The stations are already built and paid for, and connected to the grid. They have years of operational life in them. You don’t like the emissions? Then let’s burn less of it more efficiently, and scrub/catalyze the SOx, mercury, and NOx. Exactly as we do with cars, which are a bigger source of pollution. Hydro and existing simple cycle gas could provide peaking capacity.

Oh well. The good news is, the Long Term Energy Plan wasn’t written in stone. It is a PDF document and it costs nothing to edit the original.

7 comments for “Ontario’s Long Term Energy Plan: pay lots of money for small carbon reductions

  1. John Buckley
    December 3, 2010 at 19:21

    Dude,

    The Global Adjustment existed before green energy. Just sayin’.

  2. December 4, 2010 at 11:16

    John,

    You are right, the GA tracks back to 2005 and pre-dates the Green Energy Act. But today it pays for green and gas-fired electricity; check out http://www.ieso.ca/imoweb/b100/b100_ga.asp. And you notice that the numbers really go negative after 2007, when the price of gas started to trend DOWN!

  3. Lynne
    December 7, 2010 at 00:47

    Steve, I am having difficulty accessing the comments in your new format.

  4. John Buckley
    December 11, 2010 at 23:45

    Steve,

    A few more points, if I may:

    (1) You state that “Every Ontario rate-payer pays a Global Adjustment charge. This directly subsidizes the warm and fuzzy kinds of electricity that are just too expensive to survive otherwise.” Umm…what about that nice little portion dubbed GA-OPG? A part of that is going to nuclear, isn’t it? I agree there’s no quick fix for replacing nuclear (even that nice little hydro project in Newfoundland is years away and would face considerable Environmental Assessments if we tried threading a line west to Ontario) but I can’t understand why anyone would favour it long-term over cleantech? For instance, there’s still the issue of decommissioning. How will that be done? Who will pay for it? Where will we store the plants that are taken down? Recently, I was informed that it’s getting to the point where the US needs robots to take apart the contaminated structures (after 10-15 years of letting these things cool down) and robots to take apart the robots because they get contaminated and on and on in a vicious cycle. I’m still not sure where this stuff gets stored. I’m willing to be enlightened though.

    (2) How can anyone thumb their nose at conservation? Aren’t all businesses looking to be more efficient in their use of resources and delivery of products/services? That’s what conservation does. It allows us to make a watt or MW go further and do more. That’s all to the good I would think. If we conserve then we are less likely to threaten ourselves with blackouts. It’s a straw man argument to say that conservation won’t power an operating room. That’s clear. What’s also clear is that operating room may enjoy a more robust supply of electricity is the entire system is using less of what we generate and doesn’t have to worry as much about a blackout.

    (3) The GEA is about seeding a cleantech industry. The internet (and Silicon Valley) was seeded by US military research and now it’s a nice driver of innovation and US economic growth. Why wouldn’t we want to give this a shot instead of abdicating our involvement in cleantech to the Chinese and Europeans? (And coming up Washington State and California.) The Chinese are poring billions into this stuff – would you rather buy from them or supply other jurisdictions? We have a rare opportunity to carve out a role and not have this turn into the Avro Arrow Redux. Why stick with coal when we can create the next energy generation technology?

    Thanks for listening.

    J

  5. Steve Aplin
    December 15, 2010 at 21:23

    John, the GA-OPG covers more than 9,000 MW of capacity — much more than the capacity represented by GA-OPA and GA-NUG combined. Yet the Global Adjustment for the latter two far outweighs that for OPG. And we are in a period of low gas prices. The GA for OPG is worth it; the GA for OPA (minus Bruce Power) and NUGs are a lot of money for what the province is getting in return.

    The issue of used nuclear fuel is only political; not technical. Technically there is no issue at all. Shield it and store it until we are ready to recycle it. Back last summer, I stood only meters away from used fuel canisters in Canada and France, watched through a protective window as robots handled used fuel, and stood on the deck of a pool that contained thousands of tons of used fuel. I feel fine.

    You might be surprised to know that almost all the fuel that has ever been used in North American nuclear plants still resides at those same plants. Volume-wise, it is just minuscule. Used nuclear fuel is only a political issue.

    I am not thumbing my nose at conservation, just at the notion that it represents usable capacity. Of course nobody should “waste” it, but who really wastes it? “Waste” is a relative term. A pub owner who opens his windows during the summer and lets ACed air pour into the street to entice over-heated passers by to patronize his pub isn’t wasting electricity; he’s using it to attract customers, same as Bullfrog Power is doing when it advertises on TV.

    There is no issue right now with blackouts, because the power sources we have — nuclear, coal, hydro, and gas — are capable of keeping the lights on and more. Electricity is good, not bad.

    I appreciate you taking the time to write, and encourage you to keep writing.

  6. Pete
    January 7, 2011 at 18:34

    The only reason there is no supply problem right now is that demand is down 5000-7000MW from it’s historical peak. The current price of gas is low, however the price paid by the consumer for gas generated electricity is very high. New build nuclear power is at least 10-15 years away from generating anything. The fact that prices are rising dramatically when demand is low should give you an idea what will happen when demand rises with any kind of economic recovery. As for “cleantech”, please…..this technology requires support because it is impractical and unaffordable, for large scale power production. Not because it is in it’s infancy. It will always be expensive and make a limited contribution to supply, and a significant contribution to cost.

  7. December 21, 2011 at 18:42

    The electricity market here certainly is exciting as far as gigantic inefficient bankrupt bureaucracies go. That’s why I am boycotting them by putting up my own solar panels. I am 10% off grid now. Everytime there is a raise in electrical prices I match or better it by installing more panels or efficient appliances. When they increased off peak last nov. I responded by switching to LED lighting. 200 watts of CFL replaced with 20 watts LED. That shaved over 60 kwh off my bill or about $12. They increase off peak by 20%. I reduced my usage by 40% and take my business elsewhere. Well actually energy from the sun is free. I will never pay for electricity if possible again. I think whatever their plan is it will be hard to compete with free. The writing is on the wall for them. Enjoy.

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